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Business Basics

Budget

  • Created by Henry Stewart Talks
Published on November 30, 2025   3 min

A selection of talks on Finance, Accounting & Economics

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Welcome. We are focusing on the essential concept of the budget. In simple terms, a budget is a plan detailing how resources will be acquired and used over a specific period. Unlike financial statements, which look backwards to show what has happened, a budget is forward looking. Both individuals and organizations, from small businesses to governments, use some form of budgeting to achieve future goals. The main difference between personal and organizational budgets lies in their complexity rather than in their underlying purpose. Creating a budget is more than just forecasting numbers. It is a vital management tool with several important benefits. One major reason to budget is that it makes decision makers consider the future in a structured manner. Budgeting also encourages different departments or teams to coordinate activities, aligning their goals and recognizing how their plans impact one another. For instance, if a business projects higher sales, it must also plan for more production and perhaps increased staffing. Furthermore, budgets provide a benchmark against which actual performance can be measured, helping organizations identify variances and investigate their causes. Budgets come in many forms, varying by the needs of the organization. Some may use a simple profit and loss budget, while others create detailed master budgets with sub budgets for sales, production, labor, materials, and crucially, cash flow. The cash budget is particularly vital,

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